The Biden fiduciary rule is dead. What comes next?

Now that federal courts have tossed the Biden administration’s Retirement Security Rule, other Labor Department fiduciary expansions may be headed for the curb as well. 

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Opponents of the regulation are cheering a return to the status quo. The rule would have applied the fiduciary duty to more areas of one-time advice to participants with $14 trillion in savings in their 401(k), 403(b) and other retirement plans overseen by Labor. The decision by the Trump administration and Labor Secretary Lori Chavez-DeRemer not to defend the rule against two industry lawsuits made the two federal court orders vacating the regulation last month a foregone conclusion. Advocates who support broadening the fiduciary duty to more retirement-plan rollover transactions and annuity sales covered by the regulation are vowing to press on with their efforts. But any path forward looks murky at best.

“I think vacating the rule is a true setback for retirement savers,” said Natalie Pine, the chair of the National Association of Personal Financial Advisors, an advocacy and professional development group for fee-only planners, and the CEO of College Station, Texas-based Briaud Financial Advisors. She pointed out that the Biden rule and a similar Obama administration rule that also fell to industry lawsuits were interpretations of the Employee Retirement Income Security Act of 1974. 

“It appears that it’s going to have to go through Congress in order for it to be truly not an interpretation,” Pine added. “NAPFA will continue to advocate on behalf of consumers. It is vitally important, in our view, that the best interest of consumers is put first.”

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Reactions from advocates and opponents

The plaintiffs who first secured a stay in implementation of the Biden rule in 2024 and then won its outright cancellation through the court orders argue that the decisions help consumers by ensuring they get access to quality advice without more burdensome regulations. The National Association of Insurance and Financial Advisors, the Securities Industry and Financial Markets Association and the Financial Services Institute — among other trade and professional groups that had criticized the rule as regulatory overreach and challenged it in court — praised the decisions.

“This is the second time the courts have overturned the Department of Labor’s attempts at a fiduciary rule, sending the message that both the 2016 and 2024 rules exceeded the Department’s authority,” David Bellaire, an executive vice president of FSI and the organization’s general counsel, said in a statement. “FSI has long held that the SEC’s Regulation Best Interest (Reg BI) provides a consistent standard of care framework for all investment advice. Additionally, any new regulations should align with Reg BI to avoid a patchwork of varying, and potentially conflicting, standards.”

On the other hand, backers of the rule such as the AARP, the Consumer Federation of America and the CFP Board contend that the current combination of supervisory agencies and standards presents a confusing mix of rules for investors and advisors. 

The reversion to ERISA standards that state the fiduciary duty governs only continuing, regularly provided advice to a plan or participant leaves “an enormous regulatory gap that remains unfilled,” according to Erin Koeppel, the managing director for government relations and public policy at the CFP Board.

“Retirement savings should be sacred,” Koeppel said in a statement. “There should be one standard of conduct for advice about retirement savings, as the now-vacated Retirement Security Rule sought to be. Regulatory requirements should not vary by advice market or investment product. Financial professionals making recommendations to private sector retirement plans, participants and IRA owners should have to do so in their clients’ best interest, subject to a duty of care and duty of loyalty, regardless of the product the recommendations are about.” 

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Existing and possibly pending rules

Importantly, Reg BI as well as state-level fiduciary rules in Nevada, New Jersey, Maryland, New York, Massachusetts and Connecticut, FINRA supervision and other professional and common-law standards remain on the books after the court orders, Ben Rizzuto, a director and wealth strategist with the Specialist and Consulting Group at Janus Henderson Investors, wrote in a blog after the court orders last month. That means advisors must “act in clients’ best interests, disclose conflicts and document recommendations — especially around rollovers, one of the most scrutinized decisions in retirement planning,” he wrote.

In that environment, advisors should “avoid framing this as a ‘win’ or ‘loss'” and remember that their relationship with clients “ultimately rests on credibility, competence, and care,” Rizzuto wrote. Even so, advisors already operating under the fiduciary standard may have gained more of a competitive edge with the vacating of the rule.  

“From a client’s perspective, the vacated rule reinforces an uncomfortable truth: Not all retirement advice is regulated the same way,” Rizzuto wrote. “Two advisors can offer similar rollover guidance under very different legal standards depending on licensing, compensation, and relationship structure. For investors, the burden often falls on trust, transparency, and understanding — not regulatory uniformity. Ironically, the repeated rise and fall of fiduciary rules may increase client confusion rather than provide clarity. When the rules change every few years, education and plain‑English explanations become even more critical components of good advice.”

At the same time, he and others have pointed to Labor’s notice of rulemaking last year that cited the court cases and the need for a regulation called “investment advice fiduciary under ERISA” that was to “ensure that the regulation is based on the best reading of the statute” with a release date in May 2026. So the court cases may not be the last word on any potential fiduciary regulations from Labor. That could contradict a pledge from the agency’s own March 18 announcement that it “has no current plans to engage in notice and comment rulemaking in this regard,” even as it “will consider whether any additional guidance, including transitional or non-enforcement relief, is appropriate.” Labor has filed a “vacatur notice” in the Federal Register that applies the previous rules to the advice that would have been subject to the Biden rule.

“The challenged regulation wrongly sought to impose ERISA fiduciary status on securities brokers and insurance agents when there was not a relationship of trust and confidence,” Assistant Secretary of Labor for Employee Benefits Security Daniel Aronowitz said in a statement. “The Securities and Exchange Commission and state regulators regulate the activities of securities brokers and insurance agents and will continue to do so.”

Separately, Labor proposed a rule this week that could enable more retirement plan participants to invest in alternative vehicles. Representatives for the Employee Benefits Security Administration, the Labor division that regulates employer-based retirement plans, didn’t directly address a question about the prior rulemaking notice.

“The media release announcing the vacatur makes clear that the department has no current plans to engage in notice and comment rulemaking in this regard and remains focused on its core mission, redoubling its efforts to make employer-based U.S. retirement plans the strongest and most innovative in the world,” a Labor spokesperson said in an email.

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A pressing question? Or an increasingly moot one?

The industry and advisors will continue to operate with divided views shaped by differing regulatory classifications and, increasingly, partisan shifts between White House administrations that support extending the fiduciary duty to more kinds of financial advice and those that don’t. In November, a filing by Chavez-DeRemer indicating that the agency would no longer pursue the Biden administration’s appeal of the stay on the rule’s implementation confirmed that the 2024 election had determined the fate of the regulation. Without any opposition from Labor, the lawsuit plaintiffs who had filed their cases in the Northern and Eastern Districts of Texas then successfully sought final judgments vacating the rule.

Advocates for stronger regulations are now “going back to the drawing board” while wondering whether they can “get something through Congress that is purely and directly saying [advisors] have to advocate on behalf of the consumer and really make sure that their interests are put first” in every area of advice, Pine said. She rejected the idea that the regulation would have made advice prohibitively expensive for consumers, saying that the price of “hourly planning would at least be comparable” if not less expensive than a commissionable sale.   

“To me, it’s so clear that every consumer should be able to rely on their advisor, that it is something that is in their best interest,” Pine said. “And it’s sad that it is even a question.”

And, regardless of the rule’s demise, that query may be becoming less ambiguous for clients working with planners who have the profession’s most popular and respected professional certification. Despite some industry pushback, the CFP Board has enforced guidelines since June 2020 governing the profession’s more than 107,000 certified financial planners that require them to uphold the fiduciary duty in every type of advice. And those planners work in every one of the industry’s channels. 

“While we haven’t asked CFP professionals specifically about the Labor Department’s Retirement Security Rule, we have asked them about their role as a fiduciary,” Kevin Roth, the CFP Board’s managing director for research, said in a statement. “Eighty-nine percent of them in a survey we conducted last summer agree that ‘a fiduciary standard is appropriate for all financial service providers.’ Further, 87% of CFP professionals support CFP Board initiatives that aim to adopt a fiduciary standard for all financial advice.”